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In light of GAO's November 2003 report highlighting significant pay problems experienced by Army National Guard soldiers mobilized to active duty in support of the global war on terrorism and homeland security, GAO was asked to determine if controls used to pay mobilized Army Reserve soldiers provided assurance that such payments are accurate and timely. GAO's audit used a case study approach to focus on controls over three key areas: processes, people (human capital), and automated systems.

The processes and automated systems relied on to provide active duty pays, allowances, and tax benefits to mobilized Army Reserve soldiers are so error-prone, cumbersome, and complex that neither DOD nor, more importantly, Army Reserve soldiers themselves, could be reasonably assured of timely and accurate payments. Weaknesses in these areas resulted in pay problems, including overpayments, and to a lesser extent, late and underpayments, of soldiers' active duty pays and allowances at eight Army Reserve case study units. Specifically, 332 of 348 soldiers (95 percent) we audited at eight case study units that were mobilized, deployed, and demobilized at some time during the 18-month period from August 2002 through January 2004 had at least one pay problem. Many of the soldiers had multiple problems associated with their active duty pays and allowances. Some of these problems lingered unresolved for considerable lengths of time, some for over 1 year. Further, nearly all soldiers began receiving their tax exemption benefit at least 1 month late. These pay problems often had a profound adverse impact on individual soldiers and their families. For example, soldiers were required to spend considerable time, sometimes while deployed in remote, hostile environments overseas, seeking help on pay inquiries or in correcting errors in their active duty pays, allowances, and related tax benefits. The processes in place to pay mobilized Army Reserve soldiers, involving potentially hundreds of DOD, Army, and Army Reserve organizations and thousands of personnel, were deficient with respect to (1) tracking soldiers' pay status as they transition through their active duty tours, (2) carrying out soldier readiness reviews, (3) after-the-fact report reconciliation requirements, and (4) unclear procedures for applying certain pay entitlements. With respect to human capital, weaknesses identified at our case study units included (1) insufficient resources allocated to key unit-level pay administration responsibilities, (2) inadequate training related to existing policies and procedures, and (3) poor customer service. Several automated systems issues also contributed to the significant pay errors, including nonintegrated systems and limited processing capabilities.

Recommendations for Executive Action

Status: Closed - Implemented

Comments: Army and DFAS developed procedures for mobilization stations to query the DJMS-RC pay system to identify all soldiers on a mobilization tour in the pay system and assigned to a unit reporting to the mobilization station. Changes to the Mobilization Standard Operating Procedures were incorporated to require mobilization station personnel to validate the soldiers listed on the mobilization pay lists against actual personnel reporting to the mobilization station. In addition, DFAS and Army developed a tracking mechanism called, "Soldier Financial Readiness Visibility System" to provide further visibility of mobilizing soldiers' pay status.

Recommendation: To address the issues we found with respect to the existing processes, personnel (human capital), and automated systems relied on to pay activated Army Reserve soldiers, the Secretary of the Army should, in conjunction with the Under Secretary of Defense (Comptroller), establish procedures for unit commanders and unit administrators, or other designated officials (for soldiers transferred between units), to reconcile the names of Army Reserve soldiers receiving active duty pay with the names of Army Reserve soldiers reporting for duty at mobilization stations.

Agency Affected: Department of Defense: Department of the Army

Status: Closed - Implemented

Comments: The Army has developed automated listings of all soldiers arriving and departing overseas combat theaters. A May 2004 change to the Army Tactical Personnel System (TPS) added a status code for pay purposes to the system at the point of embarkation/debarkation to or from theater. Further, the Army implemented procedure to verify TPS files with hardcopy unit troop manifests to minimize errors. In May 2006, the Army Audit Agency reported that the changes were fully implemented. The implementation of these revised procedures should enable the Army to improve the timeliness and accuracy of pay and allowance payments to Army reserve soldiers.

Recommendation: To address the issues we found with respect to the existing processes, personnel (human capital), and automated systems relied on to pay activated Army Reserve soldiers, the Secretary of the Army should, in conjunction with the Under Secretary of Defense (Comptroller), establish procedures for unit commanders and unit administrators, or other designated officials, to provide the names and arrival dates for all soldiers entering and exiting in-theater locations to a designated area servicing finance office to facilitate accurate and timely payment of in-theater location-based active duty pays, allowances, and related tax benefits.

Agency Affected: Department of Defense: Department of the Army

Status: Closed - Implemented

Comments: Army Finance Mobilization Procedures were amended to require the demobilization finance office to obtain a by-name listing of unit soldiers arriving for demobilization and to perform a 100 percent accountability for all soldiers in the unit. In addition, demobilization procedures require finance personnel to reconcile soldier data on the DD Form 214 (Certificate of Release of Discharge from Active Duty)with DJMS-RC pay data to ensure soldiers being discharged do not continue to receive active duty pay. DFAS and Army also completed compliance reviews at Army mobilization/demobilization stations to assess compliance with established pay procedures.

Recommendation: To address the issues we found with respect to the existing processes, personnel (human capital), and automated systems relied on to pay activated Army Reserve soldiers, the Secretary of the Army should, in conjunction with the Under Secretary of Defense (Comptroller), establish procedures to provide demobilization stations with a list of soldiers returning from overseas that are scheduled to arrive at the demobilization station for outprocessing.

Agency Affected: Department of Defense: Department of the Army

Status: Closed - Implemented

Comments: Army Finance Office and DFAS personnel began reconciling soldier data on the DD Form 214 (Certificate of Release of Discharge from Active Duty) obtained through the Transition Processing System (TRANSPOC) with DJMS-RC pay data to ensure soldiers receiving DD Forms 214 are not continuing to receive active duty pay. Demobilization stations are required to follow-up on discrepancies.

Recommendation: To address the issues we found with respect to the existing processes, personnel (human capital), and automated systems relied on to pay activated Army Reserve soldiers, the Secretary of the Army should, in conjunction with the Under Secretary of Defense (Comptroller), establish procedures to reconcile the names of Army Reserve soldiers who recently demobilized with the names of Army Reserve soldiers still receiving mobilization pay and take appropriate action to resolve any identified pay issues.

Agency Affected: Department of Defense: Department of the Army

Status: Closed - Implemented

Comments: Army policy published in January 2004, and since incorporated in the Army Mobilization/Demobilization Standing Operating Procedures in June 2004, established requirements for a thorough one-on-one review of on-line pay records for each mobilized soldier arriving at the mobilization station. Compliance with mobilization policies and procedures have been validated through compliance reviews at mobilization/demobilization stations. Army and DFAS established procedures for a continuing program of periodic compliance reviews at active mobilization/demobilization stations to ensure continued compliance.

Recommendation: To address the issues we found with respect to the existing processes, personnel (human capital), and automated systems relied on to pay activated Army Reserve soldiers, the Secretary of the Army should, in conjunction with the Under Secretary of Defense (Comptroller), clarify policy concerning "thorough" review of soldiers' pay records upon initial mobilization to specify that finance personnel at Army mobilization stations must conduct a one-on-one review of online pay records for each mobilized soldier.

Agency Affected: Department of Defense: Department of the Army

Status: Closed - Implemented

Comments: DFAS established procedures and system automation to allow deployed finance elements and mobilization stations to obtain and distribute the Unit Commander's Pay Management Report for Army Reserve units in their area of responsibility.

Recommendation: To address the issues we found with respect to the existing processes, personnel (human capital), and automated systems relied on to pay activated Army Reserve soldiers, the Secretary of the Army should, in conjunction with the Under Secretary of Defense (Comptroller), establish procedures to ensure unit commanders and unit administrators, or other designated officials, have online access to pay management reports, such as the Unit Commander's Pay Management Report, particularly for mobilized units.

Agency Affected: Department of Defense: Department of the Army

Status: Closed - Implemented

Comments: The DJMS-RC Procedures Manual (USAR Pamphlet 37-1) was re-published in June 2005 in its entirety, to include the chapter on mobilization with the requirement that unit commanders, unit administrators, or other designated officials review and reconcile soldier pay and personnel data every month with the monthly Unit Commander's Pay Management Report for mobilized Army Reserve soldiers.

Recommendation: To address the issues we found with respect to the existing processes, personnel (human capital), and automated systems relied on to pay activated Army Reserve soldiers, the Secretary of the Army should, in conjunction with the Under Secretary of Defense (Comptroller), clarify DJMS-RC procedures to specifically require unit commanders, unit administrators, or other designated officials to review and reconcile key pay and personnel data every month, including personnel records, with the monthly Unit Commander's Pay Management Report, for all mobilized Army Reserve soldiers.

Agency Affected: Department of Defense: Department of the Army

Status: Closed - Implemented

Comments: The Army revised its Military Pay Allowance Policy (AR 37-104-4) in June 2005 and updated DD form 1561, "Statement to Substantiate Payment of Family Separation Allowance", in November 2006. The revised policy and form included explicit guidance concerning the 30-day waiting period and the commuting distance criteria. With the implementation of this policy and form, the Army should improve the timeliness and accuracy of pay and allowance payment to Army reserve soldiers.

Recommendation: To address the issues we found with respect to the existing processes, personnel (human capital), and automated systems relied on to pay activated Army Reserve soldiers, the Secretary of the Army should, in conjunction with the Under Secretary of Defense (Comptroller), clarify and simplify procedures and forms implementing the family separation allowance entitlement policy, particularly with respect to the 30-day waiting period and commuting distance criteria.

Agency Affected: Department of Defense: Department of the Army

Status: Closed - Implemented

Comments: The Army agreed with GAO's finding concerning inadequate resourcing for key unit administrator pay management responsibilities. At the time our report was issued, the Chief, Army Reserve approved a strategic plan for improving to human capital resources for Reserve unit administrative support. The strategic plan provided for consolidating administrative support, to include pay by supporting military administrative positions with corresponding drilling reserve positions, so that during periods of military duty, the unit administrator will remain at the reserve center performing the same functions. By pooling unit administration resources and responsibilities within a reserve center, there will be continuity of administrative support for units even during absences or vacancies for individual administrators. Army Reserve successfully piloted the new concept at one of the Regional Readiness Commands in 2004. As of March 2009, 11 of 34 reorganized centers were implemented. Full implementation was reported for December 2010.

Recommendation: To address the issues we found with respect to the existing processes, personnel (human capital), and automated systems relied on to pay activated Army Reserve soldiers, the Secretary of the Army should, in conjunction with the Under Secretary of Defense (Comptroller), take appropriate action to address the issues of inadequate resources provided to carry out key unit administrator pay management responsibilities identified at our case study units, particularly with respect to (1) vacancies in unit administrator positions resulting from the requirement for dual status unit administrators and (2) lack of pay management support for Army Reserve soldiers transferred between units.

Agency Affected: Department of Defense: Department of the Army

Status: Closed - Implemented

Comments: The Army Reserve conducted the recommended study of resourcing related to pay administrator positions. The study concluded that of the 1,993 unit administrator positions in the Army Reserve, 395 (20 percent) are temporarily vacant due to the incumbent serving on active duty. Only 101 (5 percent) were vacant as a result of awaiting a new personnel selection.

Recommendation: To address the issues we found with respect to the existing processes, personnel (human capital), and automated systems relied on to pay activated Army Reserve soldiers, the Secretary of the Army should, in conjunction with the Under Secretary of Defense (Comptroller), determine whether issues of inadequate resources identified at our case study units apply to other mobilized Army Reserve units and soldiers, and if so, take appropriate action to address any deficiencies identified.

Agency Affected: Department of Defense: Department of the Army

Status: Closed - Implemented

Comments: On May 2, 2005, the Army formally established the Army Ombudsman Office at the Army Financial Services Center-Indianapolis, and published a toll-free telephone number to their help desk. The Ombudsman Program mission was expanded to help Army National Guard and Reserve soldiers resolve pay, travel, and health care problems. According to Army National Guard officials, at inception the Ombudsman Office began handling 400 to 1,000 inquiries each week.

Recommendation: To address the issues we found with respect to the existing processes, personnel (human capital), and automated systems relied on to pay activated Army Reserve soldiers, the Secretary of the Army should, in conjunction with the Under Secretary of Defense (Comptroller), evaluate the feasibility of establishing an ombudsman to serve as the single focal point and have overall coordination responsibility and visibility to ensure that all Army Reserve soldiers' problems and inquiries with respect to applicable active duty pays, allowances, and related combat zone tax exclusion benefits are promptly and fully resolved.

Agency Affected: Department of Defense: Department of the Army

Status: Closed - Implemented

Comments: DFAS, in coordination with the Army, has developed an automated tracking mechanism called, "Soldier Financial Readiness Visibility System (SFRVS)." Included in this system is a reconciliation with data contained in the Electronic Military Personnel Office (E-MILPO) system. Initial testing was completed in February 2005 and the web-based application on a secure server was completed in April 2005.

Recommendation: To address the issues we found with respect to the existing processes, personnel (human capital), and automated systems relied on to pay activated Army Reserve soldiers, the Secretary of the Army should, in conjunction with the Under Secretary of Defense (Comptroller), evaluate the feasibility of modifying the deployability code or adding a duty status code in TAPDB-R that can be compared with the pay status code field in DJMS-RC to assist in identifying pay errors resulting from discrepancies between the soldiers' duty status and pay status.

Agency Affected: Department of Defense: Department of the Army

Status: Closed - Implemented

Comments: DFAS completed the recommended feasibility assessment. The assessment concluded that DJMS-RC would require a systems change to stop the withholding of taxes in tax-exempt combat zones and determined the change would take 12-18 months to implement. Since the implementation would be after the Army Reserve accounts conversion to the Forward Compatible Pay (FCP) system, a change to the DJMS-RC was not considered feasible. However, the Army modified its combat zone tax exclusion process to suspend tax withholding in the same month as earned. In addition, the Army changed its pay system to move the Army Reserve soldiers' tax reimbursement up from the first pay cycle of the following month to the end of month cycle of the same month as applicable. With the implementation of this system change, the Army should improve the timeliness and accuracy of pay and allowance payment to Army Reserve soldiers.

Recommendation: To address the issues we found with respect to the existing processes, personnel (human capital), and automated systems relied on to pay activated Army Reserve soldiers, the Secretary of the Army should, in conjunction with the Under Secretary of Defense (Comptroller), evaluate the feasibility of modifying DJMS-RC to suspend withholding taxes from soldiers when they serve in designated taxexempt combat zones.

Agency Affected: Department of Defense: Department of the Army

Status: Closed - Implemented

Comments: DFAS concluded in a feasibility assessment that a systems change to modify the process to prevent payments after demobilization was not feasible because the change could not be implemented before the new FCP pay system was implemented. However, DFAS and Army Reserves Command processed a systems change to the DJMS-RC pay system to automate payments for Hardship Duty Pay-Location (HDP-L) in March 2004. This automation feature will eliminate the continued creation of manual HDP-L payments after the demobilization date posted in the pay system. In addition, as a result of our review, improvements were made to increase the accuracy of data flowing from the Total Personnel System (TPS) in theater to finance officers for creation of the starts and stops of theater entitlements resulted in increased accuracy of HDP-L payments. These changes should significantly reduce the occurrences of active duty payments made after demobilization.

Recommendation: To address the issues we found with respect to the existing processes, personnel (human capital), and automated systems relied on to pay activated Army Reserve soldiers, the Secretary of the Army should, in conjunction with the Under Secretary of Defense (Comptroller), evaluate the feasibility of establishing a system edit to prevent DJMS-RC from generating payments for active duty service to soldiers after their date of demobilization from active duty.

Agency Affected: Department of Defense: Department of the Army

Status: Closed - Implemented

Comments: Army has taken action to establish detailed military pay requirements as part of the DIMHRS Program design. These requirements address the pay deficiencies identified in the audit report. Specifically, the requirements establish an integrated single record for all military members (Active, Reserve, and Guard). The single record will support seamless status transition as military members are mobilized/demobilized. Further, the Reserve system requirement to reenter entitlements monthly was eliminated. Duty status changes from Reserve to Active, will now automatically initiate basic pay and allowances and enable one time entry to start/stop location-based entitlements.

Recommendation: To address the issues we found with respect to the existing processes, personnel (human capital), and automated systems relied on to pay activated Army Reserve soldiers, the Secretary of the Army should, in conjunction with the Under Secretary of Defense (Comptroller), address the deficiencies noted in this report as part of the functional requirements for the FCP and DIMHRS system development efforts currently under way.